Blue Chip Investments purchased an 12-month insurance policy on May 31 2016 for $3480. The December 31 2016 balance sheet would report Prepaid Insurance of

Question

Quizplus · Accepted Answer

The insurance policy covers 12 months from May 31, 2016, so by December 31, 2016, 7 months of the policy have been used, leaving 5 months of coverage. The monthly cost is $3480/12 = $290. Therefore, the Prepaid Insurance for 5 months is $290 * 5 = $1450.

Blue Chip Investments Purchased an 12-Month Insurance Policy on May